A developer which owns Undershaw, Sir Arthur Conan Doyle's former home, has planning permission to remodel it. Photograph: Courtesy of the Victorian Society

A leading expert on Sir Arthur Conan Doyle is pursuing a high court review to overturn planning permission for a developer to carve up the author's house into separate homes.

John Gibson is using his own money to fight the case to save Undershaw in Hindhead, Surrey, one of few houses in Britain so intimately connected with a major literary figure. The house was designed by Conan Doyle, who oversaw its construction in the 1890s. It was there that he wrote Sherlock Holmes novels including The Hound of the Baskervilles. Several stories and letters refer to the house.

Gibson, author of five books on Conan Doyle, said he could not understand why Waverley borough council last month gave the green light to a developer. "There are very few literary houses that were actually built to the writer's own ideas and design," he said. Last week, Gibson secured a local government ombudsman investigation into the case.

It is an awkward situation for Jeremy Hunt, the Conservative culture secretary, not least because the house is in his constituency. Before the election Hunt supported the campaign to save the house. Today, he declined to comment. A spokeswoman said his new position means he must take a back seat.

During his 10 years at Undershaw Conan Doyle wrote much of his most significant work, and drew on Holmes's techniques to clear the name of George Edalji, falsely imprisoned for animal mutilation. He also used the house to entertain other authors, including Bram Stoker and JM Barrie.

Undershaw later became a small hotel, attracting fans from as far away as China and America. It was bought in 2004 by a developer, Fossway, but Gibson says it has since fallen into decay: "Water was running through it like waterfalls. They put in no security, and heraldic stained-glass windows were partially broken."

In 2008, Waverley council served a repair notice on Fossway. Gibson accuses the council of failing to serve a compulsory purchase order, as it remains derelict.

Under Fossway's plan, the house would be split into three units, with five townhouses added in a new wing. Unless permission is overturned, Conan Doyle's billiards room will become a kitchen-diner, his stables a garage, and his brick-lined well will be covered up.

Andrew Brown, a regional director for English Heritage, said: "The only way a planning decision can be reversed is to have it quashed in the high court on the grounds it was somehow fundamentally flawed in planning law."

Former Arts Council chairman Sir Christopher Frayling said: "If this was Jane Austen or Charles Dickens, unquestionably this house would have been preserved. Because it's Conan Doyle – and detective stories – he's treated as a second XI in literature. But he wrote some of the best-known stories in the English language."

Adam Taylor-Smith of Waverley council said: "We are in financially difficult times and there is no available public money for this nice-to-have project."

Fossway declined to comment. Michael Wilson, the developer's architect, said: "The main house is being put back in the original form but vertically divided. To leave it as a single house doesn't work financially."